How Elite Firms Hire: The Inside Story
econlog.econlib.org
econlog.econlib.org
i.e. if you can't figure out a way to work the system to get into a top school and get a > 3.5 GPA, you're not going to be able to navigate client politics on a consulting project. Similarly, if you can find a way to make yourself seem really interesting on your resume, you'll probably be able to present yourself in a polished way to a VP at your bank.
If you're a hacker who doesn't want to "play the game" (i.e. you skip college, or go to a state university for free), it's likely that you're not going to be a good fit for these kinds of big firms.
This may sound incredibly silly, but if a giant Fortune 500 company contracts with you for a huge consulting project, it doesn't matter if you're "right" - if the "right" answer isn't one that's relevant/applicable/palatable to them.
My argument is that being able to "play the game" under the unspoken rules that your future employer sets out is a useful signal for being able to "play the game" with the unspoken rules/strings a client attaches to a contract.
My wife actually works in procurement for a pretty big European oil company, and she had the "chance" to attend a couple of pitch presentations made by BCG, McKinsey and a few others for a "green energy" thingie. You're right, after all was said and done the company CEO was positively more impressed by the guys who looked and acted better during the presentations, and not necessarily by those who had the better ideas but had presented them more nervously. Also, having the looks (no matter if you're man or female) and height helps a lot.
For example, one may assume that when a client comes asking for certain work to be done, that the result of that work is the only thing that matters. Which may or may not be the case. It may be equally important that the impression the client makes executing this project is more important than what is actually produced; or the process of the project rather than the output; or other things still. Scoffing at what may naively be perceived as second-order effects being on equal footing with the 'real' output is imo one of the engineer's negative reflexes (I'm one myself, and I do this, although less than I used to when I didn't realize it even existed).
You seem to believe that working hard and creating things that actually benefit society are what is rewarded most by that society. This belief is fair, reasonable, and wrong.
This allows you to take on a lot of projects whilst still maintaining a strong sales force to bring in new projects.
/sarcasm
I used to look through thousands of resumes at east coast Ivies. I'd basically throw away anything that had under a 3.3 GPA or a 1350 SAT, unless there was something completely out-of-this-league in the extracurriculars.
The issue is the same one that YC faces. There are too many applicants for these positions, and not enough time to adequately evaluate them. So if there's some sort of red flag on the application, the expected probability of making a hire after the interview is lower and it just doesn't make sense to interview when there are better resumes available.
It's like playing texas holdem. In heads up, a king-two has over a 50% chance of winning. But when there are 10 other hands, you don't want to take the risk of someone having an Ace. Similarly, there are lots of winning candidates out there, but there isn't enough time to interview them all.
If I could go back and re-engineer the process, I'd use far more statistics. I'm certain there would be something programmatic that would figure out a way to do it right.
I'd be willing to bet that in the next 15 years someone is going to go Billy Beane on Bain McK and BCG, pick up the talent that seems to be falling in between the cracks, apply technology to the consulting process, and make a killing.
https://blogs.zoho.com/general/how-we-recruit-on-formal-cred...
How does someone in your position view a low GPA, say 2.5, considering the applicant had to work full time during school? I mean actually pay the bills waiting tables work, not 5 hours a week at a dentists office. (Also, a difficult major, say math at a top though not ivey program)
In this position, what hope if any does an applicant have?
Edit: clarity/typos
If one were to apply, they would say you should be able to work full time and be a successful, high-scoring full time student.
The other option might be networking, but with that kind of schedule, it's hard to network when your competition has more time.
Actually, I think those firms are pretty good at selecting the type of person they want. Sure, the 90th-percentile Penn State grad is much smarter than the 30th-percentile Harvard graduate. For technology, you'd rather have the PSU grad who can code. On the other hand, for McKinsey, the latter is arguably a "better" hire. Why? Because investment banking and management consulting are about image and the ability to sell oneself; being 15 IQ points smarter doesn't do much. Not all Ivy League students are very bright (some are, some aren't) but what can be said of almost every one of them (with their admission to the most selective universities as strong evidence) is that they're good at selling themselves.
It's the reason the partners earn 30-50%+ of the case fees ($500k/month) even though they're 1/6 to 1/10 of the FTEs.
Anyway, the pitch process is gated right now by whether the partner knows the CEO or executive at the potential client. They may know them from b-school, through a friend-of-a-friend from b-school, through another partner at the firm, etc.
Perhaps, much like AngelList has democratized deal-flow for early stage investors, something similar may crop up for corporations looking for strategy work that would let more lightweight firms bid for the work. And those firms could attract the most capable because they'd distribute the fees much more evenly.
Who knows though this is all speculation and thought out in a matter of minutes.
http://en.wikipedia.org/wiki/Intelligence_quotient#School_pe...
Self-discipline, working memory, socio-economic status are all better predictors of GPA.
http://www.sas.upenn.edu/~duckwort/images/PsychologicalScien...
Standardized tests, depending on the test, often test for conformance to expected grading criteria and aren't really any better at correlating with IQ.
In fact, it's often shown that in many cases, high IQ is negatively correlated with GPA (the smartest kids by IQ often get lower grades because they spend an awful lot of time being bored out of their skulls in school).
http://www.gifted.uconn.edu/siegle/Publications/VTBookUndera...
I'd be perfectly willing to take the bet that a randomly selected 90th percentile PSU grad is smarter on an IQ test than a randomly selected 30th percentile Harvard grad (by at least 15 points).
Note I'm not using the word "smart" because as Malcom Gladwell points out there are diminishing returns beyond top 10% IQ's. However, you're the one who made the claim based on IQ.
+ It's probably more pronounced than that because of the way admissions is handled individual schools do not have bell-curve distributions of SAT scores. There are sharp drop-offs below the 25th and above the 75th because schools don't have to report this numbers to USNWR.
Top schools often put as much more weight on extra-curriculars and other social conformance factors when selecting students, this is important in "certifying" graduates with that school's brand name.
i.e. "We certify that this student will do any possible nonsense imaginable to jockey their way into a noticeable and expected position."
For example, kids who've spent their High School in the Key Club, Model U.N., running for an student office position and had a spot in at least one sports team (benched or not), plus volunteered once a week at a retirement home and highway trash pickup once a month are more likely to get in then on raw GPA or SAT scores.
For some social segments, like East Asian students or Ashkenazi Jews, who've focused almost exclusively on GPA and SAT (I'm generalizing quite a bit I know), they're finding that top schools will exclude them in favor of a High School football team captains/student body president with lower scores. Tiger moms are finding that they are having to turn into soccer moms to get their kids into Harvard.
To the firms that make a point of selecting graduates from these schools, this kind of acceptance criteria ensures that they'll be able to get as much grindwork as possible out of recent grads when they hire them. They know that they can squeeze 80-100 hours a week out of these folks, churning out endless slide decks and grinding numbers on spreadsheets without actually having to put any sort of intelligence to work.
Or to put it another way. If the SAT were really all that important, and considering the SAT's positive correlation with IQ (I think it's around .8), wouldn't the schools just accept an IQ test instead?
(note: you are correct in not calling the measure of IQ "smartness", it reflects capacity not the current state of intelligence)
One thing the article doesn't go into is how insanely easy it is to game this system if you've the knack for standardized exams. The LSAT requires no prior knowledge, and simply tests how quickly you can work with logic in your head. With a 4.0 in basket weaving, and a 175 on the LSAT, you're almost guaranteed admission to Harvard Law with a $160k+bonus job waiting for you at the other end.
(I agree with your main point - law school admissions selects for completely "gameable" things).
As for getting in the top half... it's another highly game-able thing. Your grades are based entirely on exams that are basically like the LSAT---they test you on how quickly you can apply a relatively simple set of rules to ambiguous facts. The only classes that test your writing (which is what you actually do as a lawyer!) in the all-important first year are typically weighted very little, or even ungraded.
I have no idea - but my dad does law in the public sector (read: not lucrative) and anecdotally he says he's able to hire lots of top 10 law school grads who never would have applied for that kind of job five years ago.
At Harvard, Yale, and Stanford? Yes. The other good schools (top 10/15-ish) are in the 60% range. Outside the top 20, it's probably in the 10% range and below.
that in reality is equivalent to "for the ability to game the rules/system" - which seems pretty valid criteria for a law school selection
That said, I think law schools would be much better off if they had an interview process & weighted it heavily. It would be easy to get a 4.0/180 and not be "client-friendly" in the least.
this article is about hiring, not compensation. inside one firm, there's no evidence compensation is linked to which college you went to.
> how insanely easy it is to game this system if you've the knack for standardized exam
this is irrelevant.
1. no one is hiring just looking at resumes. this is just the screen. they have 500 resumes to look at; they're going to pick some sort of screening system.
2. let's say you got into Harvard Law on your LSAT but you're otherwise lazy and stupid; they'll figure that out based on your interview and your lack of other accomplishments. school is just a screener. they're still going to look at the rest of your resume and ask you questions in the interview.
And this article isn't just about screening. You can do pretty terribly at Harvard Law and still walk out with a 160k+bonus job. Firms hire after the first year of law school, and so don't really care about what you do in law school either. The interviews are a cakewalk, mostly to screen people with serious personality problems who are otherwise borderline from a school/grades standpoint.
Banking/consulting is even more credential focused. They hire from a narrower range of schools than law firms, and put less emphasis on having top grades.
This seems perfectly reasonable to me. Almost all of the "top achievers" I know also demonstrate exceptional talent in a completely different field.
I'm not so sure about that. What was Dennis Ritchie's exceptional "other talent"? Sergey Brin? David Patterson? Yale Patt? Linux Torvalds?
Conviction?
I think it's more likely that they do and we don't hear about it.
I'm pretty sure if Dennis Ritchie had climbed Everest or something, it would be all over the internet now.
Anyway, my point is that as humans we often make the mistake of seeing patterns where none exist. So, we should be wary of making claims that are unsupported by strong evidence.
heh, nice typo ;)
Larry and Urs were willing to waste a few hundred million impressions to reach the dozen or so people they might consider hiring...
The page at the other end of the link had been written entirely by Jeff Dean[1]"
-From "I'm Feeling Lucky: The Confessions of Google Employee #59" by Douglas Edwards (July 2011)
Your chances for being hired at an elite firm are roughly .5-1%, or roughly 1 hire per 100-200 applications. No filtering system in the world could accurately filter that many candidates in a reasonable amount of time. As it stands, using the highly flawed criteria we use, it still is an enormous drag on the firm to do hiring.
The criteria used - 'elite' school, impressive extracurriculars, good grades - were selected because of their performance in a quality-time trade off. Your choice in reading resumes is to do a good job with 90% accuracy at 15-20 minutes per resume vs a quick filter with 30% accuracy at 1-2 minutes per resume. With hundreds of applications to read through, which would you prefer?
It may seem unfair, but really, over time you acquire a pretty good filter. There are probably similarities with reading through resumes. You become familiar with gauging a resume reasonably well with a few seconds or minutes of reading through them --after you've read through enough of them. It's repetition and pattern recognition, in a way.
The most interesting thing I found was that the technical interview did not really matter as much as other interviews and group exercises. I think this made sense since we were hiring candidates straight from University.
There's also quite a bit of variation between how banks hire graduates in london. Some such as KBC have very hard-core testing, some like barcap use psychometric style programming questions, while some use mostly "soft testing".
The official transcript is issued by the university and is considered reliable proof of your grades. An employer might request this along with references. Grad school applications usually require them.
About GPAs, for those in a different system, in some places it's possible to get a little over 4.0 through extra-credit assignments. The top couple of students in the year might have 4.1, for example.
None of this existed in the UK, a least when I was there.
Actually, in all seriousness, doesn't this suggest there's a real imbalance or opportunity here to be exploited? Companies that hire like this surely must have some other systemic blind spots, no?
Their hiring practices might seem illogical, but I would disagree. They're just not hiring for what you think they are. It's fundamentally about hiring people who have a lot of cultural capital coupled with a work ethic and an above-average-but-not-spectacular amount of intelligence. This has only a weak correlation at best with ability to allocate capital, manage, or "consult." (Those latter skills are genuinely rare, valuable, and hard to identify anyways, so they're increasingly being replaced by organizational and technical solutions.)
Why that group of people? The types of organizations we're talking about are successful because they have secured a privileged place in the network of our economic and political economies. Their target hiring group is people who are consciously or subconsciously supportive of that existing network and will be effective at using and extending it.
So, if you had to name a group of people who are generally content with the status quo, familiar with the world of the rich and powerful, hard-working, and smart-enough, who would you go for? People who graduated from an Ivy League and have access to the resources to spend on things like climbing Mt. Everest or winning an Olympic gold medal in lacrosse.
Avoid the elite schools completely and radically cut the cost of acquiring talent (with presumably less competition for said talent). Pick out promising talent that may have been overlooked by lack of pedigree. Pick out outliers with unconvential ideas. Increase the diversity of personalities and backgrounds to increase the odds of radically new ideas. Ignore grades and come up with your own methods for testing candidates.
Many possibilities.
I'm not really sure what the use of "Elite" in this context means; these consulting/banking jobs pay pretty well and are reasonably low risk and allow young ambitious people a means towards bigger and better things, but I don't think most people here would think of these as higher EV than what you'd find pursuing competitive positions in a lot of other sectors.
Merit, like beauty is in the eye of the beholder.
Similarly, depending on what field of law you want to go into and what types of people you want to work with as a lawyer you'd pick your pro-bono work with similar rigor to open source project selection if the end goal was career advancement.
The more people we have who can perform under that pressure the better our economy will be.
For starters, the "top" programs in engineering and computer science is shuffled pretty heavily - Caltech, MIT, and Stanford are in there, but so are Berkeley, Michigan, Illinois, Washington, etc... These are all serious institutions, of course, and of course by national standards even the huge public ones are selective. But I've also noticed (this is just my own experience) that top "tech" companies considerably less concerned with whether you went to a "top" school in the first place.
I wonder why this is - I mean, I'm glad for it. I have a few theories.
The typical techie degree programss (math, physics, computer science, engineering) are so rigorous that people tend to respect the accomplishment (as long as it comes from a recognizable school with integrity).
Tech is a fundamentally creative field, rather than a positional - in other words, techies have the opportunity to create wealth rather than position themselves for a slice of the pie. If you can create wealth, well, get out there and do it! No permission is required.
On a similar note, high tech is extremely disruptive - time and again, tech founders overthrow the established order. These disruptive people often do come from Stanford or Harvard, but I think the personality type of someone who seeks to disrupt the ruling elite is going to be more open to top talent regardless of where it comes from (unlike investment banking or law firms, where (according to the article) graduates of super-elite schools are likely to filter out people who haven't attended a similar school).
Also - high tech tends to have a closer, more symbiotic relationship with academics than investment banking or even law. So high tech will place a greater premium on degrees from universities where top research in engineering and science takes place - not so much out of snobbery as because they have a close connection with these universities and get to know the students there. Interestingly, this doesn't correlate all that well with eliteness of undergraduate admissions (the ivy league, in particular, is surprisingly MIA where it comes to top graduate and or faculty departments in engineering and science... Cornell, which isn't high in the ivy pecking order, is probably one of the best).
(http://duncankennedy.net/documents/Legal%20Education%20as%20...)
The Process:
1) HR (and the hiring partner + his helpers) looks through the piles of resumes and decides who to interview or give a full-day callback
Aside: Many top law schools have job fairs where students bid on law firms to interview with and law firms have to accept interviews with those students who bid highest. The schools set this up so that low-GPA students can still get interviews and hopefully impress the interviewer with his/her passion/personality. Surprisingly, this can work out quite well in many instances for the low-GPA students, so long as the stretch isn't too big. Law firms agree to these terms or otherwise, schools deny them access to the job fair. Maybe the recent economic turmoil has changed the dynamic, but I'm not sure.
2) The initial interview (at a job fair or otherwise) is just one person who interviews you and decides whether or not to give you the opportunity for a full-day callback interview on site.
3) On site, there are usually 3-4 one-on-one interviews with a mix of partners and mid to senior level associates. Then its a lunch interview (at a high-end restaurant) with a couple of junior associates.
Any one of the aforementioned people can kill the interviewee's chances with a strong "No", though there are always exceptions when a partner has strong feelings the other way.
From my experience and talking with partners and associates, the only real criteria interviewers tend to consider:
(i) "Gut feel" - meaning whether you like the interviewee and view him/her as an enthusiastic likeable person (remember that you'll likely have to spend lots of late nights working with this person),
(ii) School/grades - knowing how everyone in the legal industry knows how important law school pedigree is in the profession, someone making it into top law schools is considered a huge indicator. Even young associates are very congnizant of law school because we know how hard we tried to get into the top schools because we knew how important it was (much much more important than for undergrad). And don't forget that this is a prestigious law firm with lots of white-haired conservative Yale and Harvard old men.
[Note: This will often have a hard/soft cutoff which will reject an applicant no matter how great the personality or extracurricular]
iii) Exceptional extracurriculars/interests - only things that really make an applicant memorable are worth anything because anyone with half a brain can come up with a list of activities/interests.
iv) Physical attractiveness for women - given that senior management in the legal profession is still dominated by men and that the most attractive women generally don't end up being lawyers, I think this can sometimes come into play (and lets not pretend that it doesn't in the rest of the world).
Worth noting is that these firms go after mediocre Ivy graduates. The 3.8 CS majors are overqualified (except for quant positions). It's not about intelligence. It's only somewhat about social status. Mostly, it's about the people they're trying to hire: status-hungry kids with an unconditional work ethic. These people make bad hires in technology (unimaginative, egotistical) but are great junior I-bankers because they'll do whatever is put in front of them, even if it's the most awful work in ridiculous volume, for the sake of prestige.
What is the profile of the 25th-percentile (as opposed to 50th or 75th) Ivy Leaguer? Someone who's not especially smart, but loaded up on trophy extracurriculars and averaged a 3:30 bedtime during high school on account of perfectionism and overcommitment. For investment banking, that's the ideal hire for a junior position.
The banks typically hire around the top 1/3 at Ivies, even higher these days given the economy. My friend, a 3.9 physics major at H/Y/P chose banking over research, and so did a lot of his similarly well-qualified classmates. Hard to turn down a job where your starting pay is about what a mid-career researcher with a PhD makes.
1. Your friend was taking a quant job, for which 3.9 and a physics major wouldn't make him overqualified.
2. He had a family connection to put a thumb on the scale and get him the most interesting projects. Banking is a pretty good deal if you have this. You still have to work 100-hour weeks, but after 2 years you can go whereever you want.
Assuming they are working 50 weeks a year.
50 * 100 = 5000 hours $125,000 / 5000 = $25/hour
Thats half what I make per hour.
Sure they might make more later on, but I'm not interested in giving up that much time for 1. something thats not my project and 2. for so little per hour
1) The $125,000 is a starting salary, which will go up substantially if the hire proves successful. There are lots of future earnings to consider when working in this type of position.
2) The psychological perception of the work and income. Does the person realize or care that he is working 50 hours a week @ $25/hour, or does the person care that he is making $125,000 annually? I am not a behavioral economist (IANABE?), but I'd have to imagine that this is a huge factor -- the salary vs. hourly mindset.
I believe its 100 hours a week, which frankly sounds absurd.
My comment is not ignoring either of your points since:
1. I state the salary will go up.
2. The point of my comment was to realize that making 125K is not much if you are working 100hr/week and have no time to enjoy it, thus a high salary might seem great but looking at it on an hourly basis can be useful etc.
In life, generally you can have more money or more time, rarely can you have both. I would rather have more time personally.
Some people may be very interested in time smoothing. That is spending time now, with the expectation of spending less time in the future because of present time invested. I think PG has talked about this in regards to startups. Work really hard for a concentrated number of years to reap large financial rewards and have the option of never working again.
Regarding the time/money trade off, that is, as you mention, a personal preference. I'd assume the type of person looking for a big law/finance/consulting job is the type of person who places much more weight on having lots of money and being part of the money culture, than enjoying downtime.
>> Worth noting is that these firms go after mediocre Ivy graduates.
Is your definition of mediocre "those who would want jobs like this" and/or "those who would be bad hires in technology"?
>> What is the profile of the 25th-percentile (as opposed to 50th or 75th) Ivy Leaguer?
What leads you to believe that these firms hire the 25th percentile Ivy leaguer?
I worked in consulting for 2 years, and I have since come to believe that startups and other technology companies are more interesting and rewarding places to work. However, dismissing the people who go to work at those places as mediocre, not particularly intelligent drones seems like more of the same HN animosity towards "business types."
Base salaries in finance and consulting are low, even at senior ranks, compared to the level of the position. Finance makes it up in bonus (if you last a year). Consulting makes it up with introductions to large-company CEOs so that if you hit a ceiling, you have options. Law has mediocre bonuses but more restrained hours and minimal travel.
If you count hours 41 to 60 as time-and-a-half and 61-plus as double-time, these jobs actually fare pretty poorly in terms of compensation. At the peak of the finance compensation bubble, first-year bankers at top firms were averaging $140,000 all-in (75k base, 65k bonus). For an 80-hour workweek adjusted accordingly, that's $24.50 per hour. If you get fired on day 364 (a common day for that to happen) and fail your bonus, it can be half of that.
However, if you've ever actually worked a 90-or 100-hour week, you know that it's not a pleasant experience. Junior-level banking averages 70-80 hours[1] per week and spikes to 100+. I lived in a "banker dorm" building during 2007 and saw many, many wraith-like analysts coming into the building at 2:30 am after a day's work.
[1] The reason for this is multifaceted, but one of the problems with banking is that it holds the expectation that analysts (a title that has nothing to do with analysis; it just means "junior peon") arrive at 9:00 am, but work travels down the ranks throughout the day and almost always has a next-day deadline. The result of this is that junior-level bankers don't get started on actual work until 3-5 in the afternoon. If they were allowed to work a late-shifted schedule, they could probably cut their hours down to 55-60.
This is true even for software, if you are putting in enough effort in the correct direction and making those decisions right. Then there are good enough odds that you are going to make a lot of money.
Heck, this is true with nearly every profession ever. Do a little more than others and make right decisions. You will be pretty rich someday.
90% of success involves, merely showing up, doing the right thing, doing a little extra, taking an occasional calculated risk and making right decisions. If you can push 12-16 hours with these qualities, trust me there are very few people who can even compete with you. And this is true in any area of work.
Bashing on it because it isn't your cup of tea isn't particularly fair.
Edit: I'd be interested to hear why I'm being downvoted. Some people I've met love the work and want to put the hours in, this is true across all industries - and especially in start-ups.
Elite for me means interesting, impactful work in a free, relaxed setting where I get to grow my skills and put cool projects under my belt.
Interning is a great way of getting to that point. Working as a consultant is just as great. The idea here is to get into a position where you can show your skills to the people who can ultimately request hiring you - then the whole dreaded HR process is just a formality. Get to know people and make a name for yourself, be the "go-to" guy whom people come to ask. Know a lot of stuff and do good work, then you will be surprised how often you can bypass all the ridiculous HR shenanigans and the rules will be bent for you, backwards if need be. Yes it is hard work but it is productive work instead time spent on polishing your CV to the latest fads, bells and whistles.
And this does NOT mean you have to be extremely out-going or need to have unreal social-skills; you just need to have a "value", you need to be good at stuff.
Call it borderline-nepotism if you want but I am sorry, this is not what they tell you about being hired and it is very real and far more important than all those bells and whistles and "tricks" for applying... and it is all about doing a good job, having a great image and having a high value so they WANT you. Win-win for both sides ultimately.
Absolute truth. I have had many jobs at this point and the only one I've ever gotten without already knowing someone was my first job at a grocery store. Even with that one I didn't just fill out an application and drop it off. I found the guy who ran the store and handed it to him personally (did I know him at that point? ;) ). He glanced at it and told me to start the next day.
Every job since then I've been recruited by someone that I already knew who worked there.
Just like I call the same guy for home repairs each time. It's easier for him to get the job because he previously did a good job.
OK, but then they look upon the HN readers as fungible headcount that can be outsourced. Different strokes for different folks - and the more you understand the rules of other's games the better you do.
You're by definition a leech when instead of being allowed to go bankrupt you're feeding on other people's money (so called "Government support").
That's not how banking got started back in the 15th-16th century, I never read of the Genoa bankers for example asking Philip II "hey, why don't you let us rob you of your South America gold?", as far as I know it was the other way round (Philip II screwing the Genoese bankers). But then again, back in the day we didn't have main-stream media Keynes-ian supporters saying things like "if we dont' give our money to support the banks the whole system would come crumbling down".